Question

Taylor owed Citizen’s National Bank over $ 40,000 and wrote three promissory notes payable to the bank at 15 percent interest ( on each note). Because the notes were past due, the bank increased the rate of interest to 22 ½ percent. To reflect the change in the interest rate, a bank official simply crossed out the 15 percent figure on the face of the instrument and wrote in 22 ½ percent. The bank claimed that this was normal business procedure. Once the change was made, Taylor was notified by the bank of the change in interest rates. When the bank sued Taylor to recover on the three notes, Taylor claimed that he had been discharged because the bank had fraudulently altered the interest rate on the notes. The bank official testified at trial that after the bank notified Taylor of the change in rates, Taylor went to the bank, consented to the increase, and signed an extension of time to pay the notes. Taylor’s only comment was that the new rate was “ awfully high.” At trial, the court ruled in favor of the bank. What do you think the court’s rationale was for its decision?